Under Armour announced a $434 million settlement Friday in a class-action lawsuit brought by shareholders who alleged they were misled about the company’s financial health.
The suit, originally filed in 2017, claims that the Baltimore-based company and its CEO Kevin Plank misled investors about declining sales and manipulated numbers by propping up future sales. Investors claimed that the company repeatedly reassured them that a 26-consecutive quarter, 20% year-over-year revenue growth streak remained “safely intact.”
The tactic resulted in shareholder losses. The company’s share price closed Friday at $6.99 per share. It was more than $50 in 2015, during the 26-quarter earnings streak, The Baltimore Banner previously reported.
The settlement comes ahead of a jury trial scheduled to take place in the U.S. District Court in Baltimore on July 15. The settlement must be approved by U.S. District Judge Richard D. Bennett.
Mark Solomon, an attorney representing the Scottish local government pension North East Scotland Pension Fund, called the settlement an important one that should send a strong message to publicly traded companies.
“Prior government enforcement efforts yielded a modest $9 million penalty. Obtaining a recovery almost 50 times greater underscores the critical role pension funds can play in holding companies accountable,” Solomon said in a statement.
The Baltimore law firm Silverman Thompson Slutkin White served as local counsel for the plaintiffs.
Sagamore Ventures, Plank’s privately held investment company, did not immediately respond to The Banner’s request for comment.
The company maintains its denial of the accusations and does not admit wrongdoing, according to a PR Newswire press release.
“Today’s announcement allows us to move past this more than seven-year-old matter so we can avoid the ongoing distraction of litigation and provide certainty to the business at a time when we are executing on important strategic priorities,” Mehri Shadman, Under Armour’s chief legal officer and corporate secretary, said in the release.
The company said it plans to pay the settlement amount through cash on hand and by drawing on its $1.1 billion revolving credit facility.
This article may be updated.
